Iran to EU: Hey, we’d be happy to supply you with your natural gas needs…

posted at 1:21 pm on May 19, 2014 by Erika Johnsen

Iran has the fourth-largest proven oil reserves in the world along with the second-largest proven natural gas reserves, and the international sanctions that have been crippling their energy-reliant revenue stream and economic growth (at least, they were until the Obama administration started lifting them in exchange for diddly squat, that is) have proven to be quite a nuisance — which is precisely why Iran has lately been taking the opportunity afforded by Russia’s aggression with Ukraine to remind the European Union that they have a whole bunch of ready reserves just waiting to be tapped. Europe gets about a third of its natural-gas supplies from Russia, a lot of which currently flows through pipelines in Ukraine; Europeans are starting to consider building up their import infrastructure and even doing their own fracking, but in the meantime, the threat of future supply disruption still looms as a possibility as the EU tries to work with Russia to settle on a deal. Iran is hoping that this newfound focus on diversified supply sources to enhance energy security will create a new willingness in the EU to perhaps cut them some more slack on the sanctions:

Amid rising tensions between the European Union and Moscow over Ukraine, Iranian oil officials have repeatedly said Tehran is ready to supply natural gas to Europe, which currently gets 30 percent of its gas imports from Russia. …

But Iran may hope the energy offer will add incentives for lifting the international sanctions as Tehran and world powers hold talks in Vienna this week aimed at solving the nuclear crisis.

Ghoncheh Tazimi, a scholar at SOAS in London, says “Iran’s case has been somewhat strengthened with the Ukraine crisis” because Tehran is “able to shape the future energy market” and help Europe diversify away from Russia. …

Iranian Oil Minister Bijan Zangeneh said May 3 that “as a country that has the capacity to supply gas in large volumes, Iran is always willing to export natural gas to Europe via pipeline or in the form of liquefied natural gas (LNG).”

On May 14, Iranian Deputy Oil Minister for International and Trade Affairs Ali Majedi suggested Europe could import Iranian gas by pipeline through Turkey and that the level of exports could range from 4 million cubic meters per day to 50.

The one major, glaring caveat to Iran’s pointed suggestions is that Iran actually isn’t technically “ready” to supply natural gas to Europe. Iran has been closed off over the years from a lot of the type of foreign investments that would allow it to update and expand its currently underdeveloped energy production to the necessary degree. Even if every economic sanction was lifted tomorrow, the capital, infrastructure, and technology they would need to start exporting natural gas to Europe could take just as long if not longer than the investments Europe needs to make to frack their own shale reserves and to import from the United States, Australia, and others — but Europe does want to diversify its supplies, and Iran definitely wants the cash.

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Why would Iran, a Russian client state, offer to replace Russian gas supplies with supplies of their own, if they wanted to keep on good terms with Putin and the Russian state?
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I know, let’s ask Hunter Biden, new to the Board of Burisma Holdings, Ukraine’s largest private gas producer. He may have some insight into why Iran would want to compete with Russia and Ukraine for supplying gas stocks to Europe. Since gas supply infrastructure is nearly non-existent in Iran, maybe Ukraine has offered to take Iranian gas to Europe via its own pipelines and transport?
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This is pretty confusing, especially since I haven’t heard any Russian response on this.

Iran, despite its huge supply of crude oil, has not built enough refineries to supply even its own needs in refined oil products (gasoline, diesel fuel, jet fuel, etc.). How long would it take Iran to build natural gas fractionation facilities (to remove propane and butane from natural gas before sending it into a pipeline) to send gas to Europe?

Whoever came up with the idea of sanctions was smoking the 80′s crack pipe. There used to be a clearly bipolar political world, in which our side was (allegedly) “the good guys” and (definitely) “the smart and rich guys”. In that world, sanctions meant termination of access to money and modern technologies. Today, both can and will be happily supplied by Russians, Chinese, Muzzies, or anyone else with desire to trade and just enough independence to erect a middle finger in our general direction. If Iran is to be treated as an enemy, just turn those camel jockeys into a self-illuminated parking lot; the “progressive humankind” will groan and grumble and huff but then eventually accept the reality, just like are accepting the latest Russian conquest.

the capital, infrastructure, and technology they would need to start exporting natural gas to Europe could take just as long if not longer than the investments Europe needs to make to frack their own shale reserves and to import from the United States, Australia, and others — but Europe does want to diversify its supplies, and Iran definitely wants the cash

the capital, infrastructure, and technology they would need to start exporting natural gas to Europe could take just as long if not longer than the investments Europe needs to make to frack their own shale reserves and to import from the United States, Australia, and others — but Europe does want to diversify its supplies, and Iran definitely wants the cash

There will be EU countries that will take this seriously, and we have only our own lack of leadership to blame for that.

And, much as Obama has put us on the krazy-kar down the track to the splashdown at the end of the ride where we’re nothing but a laughingstock, it was the last guy who got us in line for the ride with his ten-year war-to-nowhere.

If you’re going to fight a war for dubious reasons with meaningless goals you’ve got to get it over in a year, eighteen months at the outside.

Bush screwed up the wars, the current guy took over and screwed up everything else.

Even if every economic sanction was lifted tomorrow, the capital, infrastructure, and technology they would need to start exporting natural gas to Europe could take just as long if not longer than the investments Europe needs to make to frack their own shale reserves and to import from the United States, Australia, and others

Actually, that is not a bad idea. Investors are rather savvy in their business dealings, and despite some private energy firms getting a haircut in Venezuela, lessons were learned.

Given Western government never seem to accept any responsibility for failures, small or epic, there is never a need to actually do the right thing. Yet, businesses either have to produce or die. If investors were to build up the infrastructure in Iran and the nations between Iran and Europe, it would be a sign that Iran isn’t the country that ideologues in either party tell us they are. Furthermore, we know that businesses have enormous influence on government, and why that mechanism would cease to exist or work at all in Iran is beyond me to understand.

I submit that if the West really wanted to stabilize Iran, it will be through the power of smart money and investors (corrupt or not) rather then feckless governments that can’t decide from day to day who their friends and who their enemies are.

If Iran really is a basket case, then there really wouldn’t be much development or investment in Iran (other than perhaps China) and so the point is moot.